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Where to report tourist scams

Where to report tourist scams

Old Aug 3rd 2009, 7:18 pm
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Default Re: Where to report tourist scams

Originally Posted by jdr View Post
Am I the only one being confused here ?

NO

But how about putting it down to experience
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Old Aug 3rd 2009, 7:37 pm
  #17  
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Default Re: Where to report tourist scams

Originally Posted by jdr View Post
Am I the only one being confused here ?

They gave you the bill, you chose to pay by credit card, you signed it or entered your pin, so your fault whether it is a scam or not.
Scams are generally not the victims fault. I will assign some blame to victims too apathetic to do anything to protect the next person, but either way the "fault" of the scam belongs primarily to the one running the scam (it's the one who gets named as the defendant when issues go to court, for example).
Originally Posted by jdr View Post
Anyway use cash, people like you make me, who pay by cash pay more for my goods as the card cost is added into the total to cover their costs.
You can rest assured that's not how business works. Merchants charge an amount that optimizes profit, and they don't need expenses to justify their price. Eg. If marking everything up one euro yields more profit, why would you think they would need to assign it to an expense? As a business owner, you should increase prices whenever it increases profits, regardless of actual expense. What visa charges the merchant is orthogonal to the shelf price. If you increase prices, you run the risk of selling fewer units, and losing profit. So you can't just systematically increase prices simply whenever expenses (like that of card processing) eat into your profit per unit to hold profit static, or you price yourself out of the market.

Imagine if Microsoft increased the price of Windows every time they lost a lawsuit. They'd ruin themselves if they thought they could hold their profit static like that. The market determines the price, not the suppliers cost. The suppliers cost only determines whether or not they can do business.

Last edited by jgombos; Aug 3rd 2009 at 7:54 pm.
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Old Aug 3rd 2009, 8:14 pm
  #18  
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Default Re: Where to report tourist scams

Originally Posted by jgombos View Post
Scams are generally not the victims fault. I will assign some blame to victims too apathetic to do anything to protect the next person, but either way the "fault" of the scam belongs primarily to the one running the scam (it's the one who gets named as the defendant when issues go to court, for example).

You can rest assured that's not how business works. Merchants charge an amount that optimizes profit, and they don't need expenses to justify their price. Eg. If marking everything up one euro yields more profit, why would you think they would need to assign it to an expense? As a business owner, you should increase prices whenever it increases profits, regardless of actual expense. What visa charges the merchant is orthogonal to the shelf price. If you increase prices, you run the risk of selling fewer units, and losing profit. So you can't just systematically increase prices simply whenever expenses (like that of card processing) eat into your profit per unit to hold profit static, or you price yourself out of the market.












Imagine if Microsoft increased the price of Windows every time they lost a lawsuit. They'd ruin themselves if they thought they could hold their profit static like that. The market determines the price, not the suppliers cost. The suppliers cost only determines whether or not they can do business.
Think you`re wrong there pal, you can`t tell me the shop pays the card cost.
Resellers work out the artical cost to them, the profit they need, and the possible cost of card charges etc to get their cash.
This total is passed on to all customers regardless of how they pay, so card users are causing me to pay more, if there were no credit cards then it would not be added to the cost of the artical.

How much are you talking about here ?
I could eat tapas till I was stuffed and 2.5% of the bill would be about 50 cents, mountain out of a molehill springs to mind really.

Last edited by jdr; Aug 3rd 2009 at 8:18 pm.
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Old Aug 3rd 2009, 8:19 pm
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Default Re: Where to report tourist scams

Originally Posted by jdr View Post
Think you`re wrong there pal, you can`t tell me the shop pays the card cost.
Resellers work out the artical cost to them, the profit they need, and the possible cost of card charges etc to get their cash.
This total is passed on to all customers regardless of how they pay, so card users are causing me to pay more, if there were no credit cards then it would not be added to the cost of the artical.

Not sure that applies across the board - I've both worked for a mail order business and run my own business which charged the customer directly according to what card they chose to pay with - most for AmEx, middling for most credit cards & least for debit cards (or nil for cash or cheques, those were the days!)..... So cash/cheque payers did not have to stump up to cover the cost of other people's choice of payment.
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Old Aug 3rd 2009, 8:28 pm
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Default Re: Where to report tourist scams

Originally Posted by fionamw View Post
Not sure that applies across the board - I've both worked for a mail order business and run my own business which charged the customer directly according to what card they chose to pay with - most for AmEx, middling for most credit cards & least for debit cards (or nil for cash or cheques, those were the days!)..... So cash/cheque payers did not have to stump up to cover the cost of other people's choice of payment.
You are talking when only three people had cards. ;-))
What would you say if you bought a 1000€`s dress in a shop and they said "Oh card madam that will be 1025€`s then, thank you."
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Old Aug 3rd 2009, 8:41 pm
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Default Re: Where to report tourist scams

Originally Posted by jdr View Post
Think you`re wrong there pal, you can`t tell me the shop pays the card cost.
Resellers work out the artical cost to them, the profit they need, and the possible cost of card charges etc to get their cash.
This total is passed on to all customers regardless of how they pay, so card users are causing me to pay more, if there were no credit cards then it would not be added to the cost of the artical.
You don't seem to have read what I posted. If you're a merchant who can increase net income by simply charging more, then you weren't charging the optimum price to begin with. And in that case, the higher cost to the consumer is due to the merchant becoming more business savvy. Merchants do not need to justify their pricing to the consumer. The consumer simply decides whether they like the value. Price is inversely proportional to perceived value, thus if you increase prices, you will lose customers.

Customers don't care how much profit you "need", and business savvy merchants don't let what they think they need influence their calculation on what market price is optimum.

As a consumer, I could not care less what you pay your suppliers for a pound of rice, or how you justify it. You just have to give me a good price, or lose my business. If you charge only what you need, and that's much less than what you can get away with and what's optimum, then I would love to be your customer But eventually, you'll get smart and realize you can charge more than you need. If your "need" puts the price absurdly high, you'll end up ruined. "Need" can only be used to assess whether the business is working out for you, it can't be an effective input to your business model for computing an optimum price.

If you "need" 1000€ more one month because of some unexpected loss, do you expect your boss to pay a 1000 bonus that month, or ask your clients to pay more to cover your extra need? If you do, and you get away with it, why not increase your judgment of what you need every month?
Originally Posted by jdr View Post
How much are you talking about here ?
I could eat tapas till I was stuffed and 2.5% of the bill would be about 50 cents, mountain out of a molehill springs to mind really.
50 cents per customer, at 500 customers/day open 7 days in a tourist hotspot, that's ~90,000 euros/year you're ripping off. If all consumer-facing businesses ran the same scam, each person would lose on the order of hundreds per year.

Last edited by jgombos; Aug 3rd 2009 at 9:11 pm.
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Old Aug 3rd 2009, 8:50 pm
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Default Re: Where to report tourist scams

Originally Posted by fionamw View Post
Not sure that applies across the board - I've both worked for a mail order business and run my own business which charged the customer directly according to what card they chose to pay with - most for AmEx, middling for most credit cards & least for debit cards (or nil for cash or cheques, those were the days!)..... So cash/cheque payers did not have to stump up to cover the cost of other people's choice of payment.
A business cannot legitimately vary price based on the payment instruments you mention. I realize some businesses do it anyway, because it's not enforced, but it violates the merchant agreement with visa, m/c, and amex. You would see it much more if it were legit.
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Old Aug 3rd 2009, 9:25 pm
  #23  
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Default Re: Where to report tourist scams

Originally Posted by jgombos View Post
You don't seem to have read what I posted. If you're a merchant who can increase net income by simply charging more, then you weren't charging the optimum price to begin with. And in that case, the higher cost to the consumer is due to the merchant becoming more business savvy. Merchants do not need to justify their pricing to the consumer. The consumer simply decides whether they like the value. Price is inversely proportional to perceived value, thus if you increase prices, you will lose customers.

Customers don't care how much profit you "need", and business savvy merchants don't let what they think they need influence their calculation on what market price is optimum.

As a consumer, I could not care less what you pay your suppliers for a pound of rice, or how you justify it. You just have to give me a good price, or lose my business. If you charge only what you need, and that's much less than what you can get away with and what's optimum, then I would love to be your customer But eventually, you'll get smart and realize you can charge more than you need. If your "need" puts the price absurdly high, you'll end up ruined. "Need" can only be used to assess whether the business is working out for you, it can't be an effective input to your business model for computing an optimum price.

If you "need" 1000€ more one month because of some unexpected loss, do you expect your boss to pay a 1000 bonus that month, or ask your clients to pay more to cover your extra need? If you do, and you get away with it, why not increase your judgment of what you need every month?

50 cents per customer, at 500 customers/day open 7 days in a tourist hotspot, that's ~90,000 euros/year you're ripping off. If all consumer-facing businesses ran the same scam, each person would lose on the order of hundreds per year.
I don`t think you have read what I posted either, card charges are added to unit costs.
So card users are causing cash payers to pay more than they would need to without credit cards being involved.
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Old Aug 4th 2009, 5:24 am
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Default Re: Where to report tourist scams

Originally Posted by jdr View Post
I don`t think you have read what I posted either, card charges are added to unit costs.
Added to the merchant's cost, yes, added to the shelf price, no. The shelf price is based on market conditions. If you can increase that price for more profit, then you were not charging the optimum price to begin with. If you're charging the optimum price to begin with, a price increase will reduce net income, by definition of optimum price, and you cannot increase the consumers price as a means to increase profit. You must eat the loss. If this causes your profits to fall below how much you need to make, you simply go out of business (in the absence of a government bailout).

BTW, I responded directly to every claim. Which issue did you bring up that's unaddressed?
Originally Posted by jdr View Post
So card users are causing cash payers to pay more than they would need to without credit cards being involved.
You would have to prove that it's not a capitalistic market where competition determines price, not how much you "need".
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Old Aug 4th 2009, 6:09 am
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Default Re: Where to report tourist scams

Originally Posted by jgombos View Post
Added to the merchant's cost, yes, added to the shelf price, no. The shelf price is based on market conditions. If you can increase that price for more profit, then you were not charging the optimum price to begin with. If you're charging the optimum price to begin with, a price increase will reduce net income, by definition of optimum price, and you cannot increase the consumers price as a means to increase profit. You must eat the loss. If this causes your profits to fall below how much you need to make, you simply go out of business (in the absence of a government bailout).

BTW, I responded directly to every claim. Which issue did you bring up that's unaddressed?

You would have to prove that it's not a capitalistic market where competition determines price, not how much you "need".
when I was in the hotel trade we included credit card costs in our 'buying price' or 'merchant cost' if you want to call it that - then added a percentage to get our 'selling price' or 'consumer price'

so all our customers paid the cost of using a credit card indirectly, whether they paid by card or not

obviously an eye was kept on competitor price, but unless you are in the burger business it's not cut & dried like it is in, say, a supermarket

Last edited by lynnxa; Aug 4th 2009 at 6:35 am.
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Old Aug 4th 2009, 6:26 am
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Default Re: Where to report tourist scams

Originally Posted by jgombos View Post
Added to the merchant's cost, yes, added to the shelf price, no. The shelf price is based on market conditions. If you can increase that price for more profit, then you were not charging the optimum price to begin with. If you're charging the optimum price to begin with, a price increase will reduce net income, by definition of optimum price, and you cannot increase the consumers price as a means to increase profit. You must eat the loss. If this causes your profits to fall below how much you need to make, you simply go out of business (in the absence of a government bailout).

BTW, I responded directly to every claim. Which issue did you bring up that's unaddressed?

You would have to prove that it's not a capitalistic market where competition determines price, not how much you "need".

I think you've been reading too many economic theory books

In practice, I agree more with JDR, that card costs get passed to the consumer. This is especially if the bar is an independant trader or small company. If you are talking about big US chains like Starbucks then yes your economic theorising is correct as they fix their price according to the market/opportunity costs etc.

A few years ago I worked on the Mastercard campaign to try and get traders to promote using cards for small transactions. Every merchant I spoke to preferred that their clients paid cash rather than cards, even though Mastercard will swear blind that cards are better value.

Also, small thing abour Barcelona. It is most probable that anyone working in the very touristy bars in BCN will understand good English and accents. Hardly any of them are Catalan/Spanish. Most I saw were Italian and Brazilian
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Old Aug 4th 2009, 6:37 am
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Default Re: Where to report tourist scams

Originally Posted by cricketman View Post
IBIG SNIP!

Also, small thing abour Barcelona. It is most probable that anyone working in the very touristy bars in BCN will understand good English and accents. Hardly any of them are Catalan/Spanish. Most I saw were Italian and Brazilian
hadn't thought of that!
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Old Aug 4th 2009, 6:59 am
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Default Re: Where to report tourist scams

Originally Posted by lynnxa View Post
when I was in the hotel trade we included credit card costs in our 'buying price' or 'merchant cost' if you want to call it that - then added a percentage to get our 'selling price' or 'consumer price'

so all our customers paid the cost of using a credit card indirectly, whether they paid by card or not

obviously an eye was kept on competitor price, but unless you are in the burger business it's not cut & dried like it is in, say, a supermarket
There is an optimum price, where an increase damages profit, and a decrease damages profit. Although it's not straight forward to determine what the optimum price is in some industries, the optimum price still exists. Small mom and pop shops (and apparently your hotel) will account for all kinds of senseless factors in coming up with a price (ie. some apparently base it on how much they "need" to earn), and chances are the price is off the mark for being optimum because the business owner is simply choosing to allow irrelevant factors set the price. If they get it right, it's just chance; a craps shoot. Business owners who senselessly set prices on this kind of criteria aren't even worth consideration, as you might be charged more because the owner suddenly has to pay their kids education loan, and they decide to factor that in to the price. While certainly there are some not so articulate business people doing business, it's a bit far fetched to say it's widespread enough to make a difference in what JDR pays for a tapa. JDR is frustrated because she thinks card holders are driving up her prices. If her prices were truly increasing in connection with credit card fees, it would be because merchants haven't had an econ 101 class and were charging too little to start, not because consumers want financial security.
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Old Aug 4th 2009, 7:07 am
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Default Re: Where to report tourist scams

Originally Posted by jgombos View Post
There is an optimum price, where an increase damages profit, and a decrease damages profit. Although it's not straight forward to determine what the optimum price is in some industries, the optimum price still exists. Small mom and pop shops (and apparently your hotel) will account for all kinds of senseless factors in coming up with a price (ie. some apparently base it on how much they "need" to earn), and chances are the price is off the mark for being optimum because the business owner is simply choosing to allow irrelevant factors set the price. If they get it right, it's just chance; a craps shoot. Business owners who senselessly set prices on this kind of criteria aren't even worth consideration, as you might be charged more because the owner suddenly has to pay their kids education loan, and they decide to factor that in to the price. While certainly there are some not so articulate business people doing business, it's a bit far fetched to say it's widespread enough to make a difference in what JDR pays for a tapa. JDR is frustrated because she thinks card holders are driving up her prices. If her prices were truly increasing in connection with credit card fees, it would be because merchants haven't had an econ 101 class and were charging too little to start, not because consumers want financial security.
not just one hotel - I worked for a major hotel & restaurant company as a manager - still going strong & going strong long before either of us were born I suspect - & credit card costs were added into 'buying price' so were passed on to everyone



JDR had a sex change
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Old Aug 4th 2009, 7:20 am
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Default Re: Where to report tourist scams

Originally Posted by lynnxa View Post
not just one hotel - I worked for a major hotel & restaurant company as a manager - still going strong & going strong long before either of us were born I suspect - & credit card costs were added into 'buying price' so were passed on to everyone



JDR had a sex change
I would like to further add my support to the JDR/Lynnxa view

We have to remember that most businesses in Europe (and the world) are still SMEs (thanks god) so what jgombos calls "senseless" is actually very rational. When we pay for something it is an interaction between two human beings, so it is normal that all merchant costs are reflected in the price.

Those tapas in central BCN probably cost jgombos 5-8 euros each. This is mainly a reflection on the scandolously high rents that get passed to the consumer. If someone could serve tapas at 1 euro each in cetral Barcelona they would give it a go, bc they could get increased footfall and make profit that way (e.g. the weatherspoons model).

Costs nearly always affect the selling price of the product. Think about food costs, petrol costs etc. Microsoft isnt a good example as the production costs are such a small proportion of the selling price and one could argue that Microsoft have monopolised the market so can charge however much they like.
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